Strategy Reduce waste and nonvalueadded costs

TABLE 2-9 Reducing Waste and Non-Value-Added Costs

Project initiatives

Measures

Risks

Involve Quality teams in identifying and resolving quality problems in key production processes

Record amount of rework and scrap by department on a monthly basis Stay within approved budget guidelines for rework and scrap costs

The company Quality teams were not successful in resolving quality issues

Minimize equipment damage by educating employees, monitoring equipment use, and enforcing rules for properly using equipment

Review monthly maintenance to Equipment damage rates ensure departmental accountability continued for responsible equipment use; stay within approved budget guidelines for equipment expenses

Eliminate duplication of effort in administrative processes; process improvement/reengineering; encourage employee use of best practice techniques

Benchmark other processes; monitor Administrative redundancy process costs and increase costs of operation continued

Improve inventory management of supplies and equipment (includes maintenance, production and raw material in-process)

Reduce inventory by at least 5%

Inventory management initiatives were not successful because of internal plant or supplier performance limitations

Minimize waste generation and increase recycling

Waste product reductions

Increasing rates of waste production continued

This strategy was in concert with Strategy 5—to build a knowledgeable and productive workforce. Both were required to improve overall productivity. This strategy was key to improving the overall productivity of Eastern by eliminating waste and unnecessary work, for example, reducing the cost of poor quality through process improvement and ISO and QS 9000 and 14000 documentation.

The company's quality and process improvement efforts started on the production floor, where quality was built-in through consistent practices and extensive use of statistical process control methods. Eastern was committed to being quality driven, not cost driven, thus the quickest route to elimination of waste and non-value added costs was "doing it right the first time." They looked to this strategy as a major factor in lowering the operating expenses by four cents per pound.

The Quality teams would continue to identify and resolve quality problems in key production processes; a new focus would be placed on administrative and support processes to ensure that they were under review in the context of process improvement as well.

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